In merger GOP administration, Dish’s gets to play kingmaker
IT’S FITTING that Dish Network Corp. Chairman Charlie Ergen is set to speak to Wall Street just as the wireless industry’s merger moratorium is lifted. His company’s massive stockpile of airwaves figures heavily in the speculation over who will buy whom.
Dish reports earnings Monday, just days after the end of a government-imposed quiet period related to a federal sale of wireless spectrum.
In that auction and other deals over the past decade, Ergen’s satellite-TV company compiled US$ 34.7 billion ( RM156 billion) worth of nation-blanketing airwaves.
Ergen kept buying spectrum even after an effort to merge with Sprint Corp. fizzled a few years ago, and investors have been trying to figure out his endgame ever since.
Now, with a merger-friendly Republican administration in place, Ergen has a chance to finally do something with all those assets – if the notoriously prickly billionaire can find a willing partner, perhaps in T-Mobile US, Verizon Communications or Comcast. The challenge for Ergen, 64, is to convince a would-be suitor that Dish hasn’t become too unwieldy of an acquisition target with all that spectrum, including US$ 6.2 billion ( RMworth in this year’s auction.
“You have to wonder if Dish’s spectrum acquisitions have helped or hindered Charlie’s options,” said Amy Yong, an analyst with Macquarie Capital USA Inc.
The government-imposed quiet period expired Thursday at 6pm, and companies were immediately expected to start reaching out to each other about potential deals.
Among Dish’s more compelling M& A targets is T-Mobile, the fastest- growing US wireless carrier. Ergen said he was impressed with the way T-Mobile was revitalised under John Legere, its chief executive officer. Preliminary deal talks between Dish and T-Mobile parent Deutsche Telekom AG stalled two years ago when the two sides couldn’t agree on terms.
Sprint and T-Mobile have been viewed as the most likely to merge because together, they could cut costs and build a stronger competitor to market leaders AT&T Inc. and Verizon. If Sprint and T-Mobile get together, Englewood, Colorado-based Dish loses two potential partners, and Ergen’s job gets tougher.
Sprint’s owner, SoftBank Group Corp., is looking for ways to better reflect the value of its own trove of airwave licences, even entertaining the notion of spinning off some spectrum into a separate, publicly traded company, Bloomberg reported earlier this week, citing people familiar with the matter. A deal with T-Mobile or another party would have to properly compensate Sprint for its airwaves, the people said. SoftBank Chairman Masayoshi Son has to be careful, though, not to send T-Mobile into the arms of another suitor like Dish, said Walt Piecyk, an analyst with BTIG LLC.
“Now, with the quiet period lifted, every hour that passes without a deal is an an indication that Masa has not been able to come up with a offer that is attractive to Deutsche Telekom,” Piecyk said.
If Sprint and T-Mobile are out of the picture, Ergen could turn to Verizon, which has been part of a will-they/won’tthey saga with Dish for ages. Chief Executive Officer Lowell McAdam has said in the past that he was interested in Dish’s airwaves but not its satellite TV business. And AT& T’s purchase of Dish’s biggest satellite rival, DirecTV, in 2015 made a Verizon bid for Dish seem more plausible.
But there are reasons to think Verizon might not be so into Dish.
The company offered US$ 1.8 billion last week for Straight Path Communications Inc., an owner of spectrum in a higher frequency band than Dish holds, suggesting Verizon is looking for a different type of airwave than Dish can offer.
Dish holds 93.6 megahertz of spectrum on average countrywide, making the company the fifth-largest holder of broadband airwaves in the US. — WPBloomberg